A business and its owner(s) maintain an interesting relationship. The interplay between the individual and the organization often represents a tremendous source of pride and accomplishment as well as a wellspring of stress and worry. Setting aside these feelings for the moment, a business more tangibly provides the means by which owners create value for themselves (let’s not forget other shareholders and employees). Generally speaking, value creation comes in the form of providing an earnings stream over the course of a business’s life that allows the bread to be put on the proverbial table. It helps to pay for the kids’ education, retirement as well as your home and lifestyle. The other value creation avenue comes upon an exit, where a new owner identifies future opportunity that can be captured from the foundation you built and is willing to pay for it.
Let’s get right to the point. Top 10 lists are fun, especially when you have the wit and studio audience that Dave Letterman had. Well I do not have either, but I will try to run with this well established concept for my blog, this time within the framework of a business sale. I appreciate that it might be rather cavalier for me to volunteer a few succinct bullet points about the prudent steps to take in a sale process, and expect to have encapsulated every aspect that is imperative for a business owner to consider.
“I’m ready to sell my business.” Many business owner conversations with Baldwin & Clarke Corporate Finance (BCCF) (our investment banking arm) begin just that way. Unfortunately, their businesses may not be as ready as they are: at least not for what they think it’s worth or need. What it’s worth to him or her may not be what it's worth from a buyer’s perspective. One expert estimates that only 3% of businesses are capable of being transferred in a way that achieves the owner’s goals and objectives.
Ok, I admit it. I was recently drawn into watching one of the ubiquitous legal shows on TV the other night. (Hey, at least it was not CSI Topeka.) This particular episode revolved around a successful business with two partners. As the story unfolded, one of the partners experiences an untimely demise and the surviving partner is now a partner with the deceased partner’s wife. The balance of the show is filled with the requisite banter, scheming, and underhanded tricks, but ultimately the newly forged (however forced) partnership works out their differences and make for a good team. The misadventure ultimately ends well.